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Don't quote me on this or anything, but I was under the impression there'd been some sort of muckup with the contracts so she bailed. Or maybe it was that she got a bigger role elsewhere, like Alana's actress? I'd dig through the old threads from the official 4400 forum--that might have the reasons behind it.

Her IMDB seems to imply she has a recurring role in Dirt (don't watch that show, so I don't know how regular she is, whether she might get killed off, or what) and that she's got a movie coming out next year called "From Within" -- she doesn't have a lead though, she's billed fifth. And it sounds like your typical horror/slasher film, so yeah.

Other than that, she seems to have done some guesting on various shows, just one-offs.

So... I can't really see the motivation to leave on her end. I mean, other than that thing on Dirt, it doesn't seem like she had much going on. So that leads me to believe that the decision was made on the production side. The writers didn't know what else to do with her character (did she ever show an ability on her own? i.e., not related to carrying Isabelle? I don't think she did...) so they axed her.

Again, digging through the old threads on the official The 4400 forum should say, but my recollection, in reading those threads, was that there were contractual problems, not a lack of knowing what to do with the character. If that's all it had been, they could have had a few new scenes of Lily the young mother, if only in flashback, instead of going straight to old Lily. The complete lack of Laura Allen in season three was not accidental.